## Global Economic Uncertainty Remains Elevated, Weighing on Growth

_IMF Blog, January 26, 2023_

## Source details

**Canonical URL:** [Global Economic Uncertainty Remains Elevated, Weighing on Growth](https://www.imf.org/en/blogs/articles/2023/01/26/global-economic-uncertainty-remains-elevated-weighing-on-growth)

## Other formats

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## Bibliographic details
- Authors: Hites Ahir, Nicholas Bloom, Davide Furceri
- Published: January 26, 2023

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### Key findings
- Successive shocks—ranging from Brexit and US-China trade tensions to the pandemic and war—have combined to keep uncertainty elevated.
- Elevated uncertainty “in turn hurts economic growth” as IMF research shows.
- The World Uncertainty Index was updated to provide monthly readings instead of quarterly, covering 71 economies and dating back to 2008.
- The index “fell in December, the most recent reading,” but has “continued to hit elevated levels” due to successive shocks, including Russia’s invasion of Ukraine and the associated cost-of-living crisis.
- Major historical jumps in uncertainty:
  - After the United Kingdom’s unexpected vote to leave the European Union (Brexit).
  - After the surprise outcome of the 2016 presidential election in the United States.
  - During US trade tensions with China.
  - Early 2020 with the onset of the coronavirus pandemic.
  - Less than two years later with another shock from Russia’s invasion of Ukraine and renewed trade uncertainty associated with the risk of geoeconomic fragmentation.

### World Uncertainty Index: update and scope
- Frequency change: from quarterly to monthly readings.
- Coverage: 71 economies.
- Historical span: data back to 2008.
- Most recent reading referenced: December (as reported in the piece).

### Methodology
- The approach uses a text analysis of reports by the Economist Intelligence Unit.
- It classifies sources of uncertainty by analyzing which words have been published in close proximity to mentions of uncertainty.
- The authors state it is “the first effort to construct a text-based monthly measure of uncertainty covering many developing countries and being comparable across countries.”

### Interactive chart features and decomposition
- The interactive chart includes a second slide that breaks down the composition of uncertainty mentions linked to:
  - Trade
  - The pandemic
  - Spillovers from major economies
  - Russia’s war in Ukraine
- This decomposition illustrates how drivers of uncertainty have evolved over time.

### Economic implications highlighted
- Elevated uncertainty has become a “new normal for turbulence” which is partly driven by political fragmentation between countries.
- The sequence of shocks has produced recurring spikes that weigh on global economic growth.
- Recent drivers include Russia’s invasion of Ukraine and the associated cost-of-living crisis, contributing to continued elevated uncertainty.

### About the blog and institutional context
- IMFBlog is “a forum for the views of the International Monetary Fund (IMF) staff and officials on pressing economic and policy issues of the day.”
- The IMF is based in Washington D.C. and is “an organization of 191 countries, working to foster global monetary cooperation and financial stability around the world.”
- The views expressed are those of the author(s) and do not necessarily represent the views of the IMF and its Executive Board.

*Source: IMF Blog post “Global Economic Uncertainty Remains Elevated, Weighing on Growth,” January 26, 2023.*

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## References

- [geoeconomic fragmentation](https://www.imf.org/en/Blogs/Articles/2023/01/16/Confronting-fragmentation-where-it-matters-most-trade-debt-and-climate-action)

_Source: https://www.imf.org/en/blogs/articles/2023/01/26/global-economic-uncertainty-remains-elevated-weighing-on-growth_